Mixed quarterly results in commercial real estate
The latest data from Colliers International show strength in the Valley's industrial sector, but vacancies in the office market are still way above the national avergae. The third-quarter numbers show slow improvements in the amount of leased office space, especially in the suburbs of Tempe, Scottsdale and Chandler. But Research Manager Pete O’Neil said more than 21 percent of the office supply across the Valley is empty, compared to about 13 percent nationally.
That means rents will continue to go down for several more quarters.
"We’ve seen rents on the office side of things decline for almost five years in a row now. I think this might be an advantageous time to lock in a pretty good deal," O'Neil said.
Collliers doesn’t expect any new speculative office construction to start until mid 2014 or early 2015.
Meanwhile, the Valley’s industrial market continues its recovery.
Large tenants like Amazon have soaked up hefty amounts of industrial space recently -- so much space that developers have broken ground in the third quarter on two new projects that total 644,000square feet, according to Colliers' report. The developers did so without having a tenant lined up.
"That hasn’t happened for several years," O'Neil said. "I think that does speak to the perceived strength in the marketplace that I’m going to build a building and I’m confident I’ll have a tenant for it when it’s out of the ground and ready to go in six months."
Another 1.5 million square feet of speculative industrial space is set to begin construction by the end of the year, according to the report. It added, "how these buildings lease will serve as a barometer of the health of the market and will influence decisions on the timing of future projects.
Experts predict industrial should continue its recovery as the housing market accelerates.